My opinion is: you need to start small (at most 10% of your portfolio). Then let it run. However, never let it become more than 60% of your portfolio. Rebalance and put the money into something else that is not leveraged.
As an lnvesting enthusiast, I often wonder how top level investors are able to become millionaires off investing. . I’ve been sitting on over $545K equity from a home sale and I’m not sure where to go from here, is it a good time to buy into stocks or do I wait for another opportunity?.
People dismiss the importance of advisors until they are burned by their own emotions. I remember a couple of summers ago, following my lengthy divorce, I needed a good boost to assist my business stay alive, so I looked for qualified consultants and came across someone with the highest qualifications. She has helped me raise my reserve from $275k to $850k, despite inflation.
How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?
NICOLE ANASTASIA PLUMLEE is her name. She is regarded as a genius in her area and works for Empower Financial Services. She’s quite known in her field, look-her up.
I do daily dollar cost averaging into leveraged ETFs to mitigate the risk of volatility drag. If it drops there's drag, but you also buy more at low prices. And if it really drops hard, you can put in a lump sum that will grow on the way back up. I do this for a 2x leveraged Nasdaq fund which I hold long term, and also for a 4.3x fund which I daily DCA into then take profits from whenever it is having a really good run. Long term the drag on the 4.3x is too dangerous to hold.
You'll notice that vol- drag works in your favour over the long term. Thats why 3x etfs actually return much more than 3x the underlying. In a downturn they actually lose less than 3x also... There are slightly more up days than down days, and as long as this generally remains true im a long term holder who's buying in on dips > 10%. One problem I have is sleeping- I'm in Australia and tqqq trades when I should sleep. Soon ill have to rebalance as its now about 30% of my portfolio, which maybe too High at 51yo. If I was a younger goat, id exclusively give these etfs time and feed them regularly.
These are my favorites. I own TNA, SOXL, TECL, & TQQQ. At least 100 shares for each of them! I do sell covered calls and puts on them from time to time. Holding is definitely the way to go!
@@StijnSchmitz Yeah. Actually have made several thousands since I started doing it. Of course a lot of people would say it’s risky and also mention that the market crash would be bad but I think it’s going to be fine for at least a few more months or years perhaps ! Everything is a risk anyways. I like them better than single stocks.
Since February 2013, there have been market-wide circuit breakers that respond to single-day declines in the S&P 500 index. When the index falls by 7% below its previous close, it is considered a Level 1 decline. A Level 2 decline refers to a drop of 13%. Finally, a Level 3 decline refers to a drop of 20%. Level 1 or 2 circuit breakers halt trading on all exchanges for 15 minutes unless they are triggered at or after 3:25 PM (in which case trading is allowed to continue). Level 3 circuit breakers halt trading for the remainder of the trading day (from 9:30 a.m to 4:00 p.m.).
I need to say that tqqq pays dividends, quite similar to SPy, for example. And because tqqq grows so fast, the dividends grow too, despite the low yield.
Volatility drag is present in any ETF also the ones without leverage. But in a leveraged ETF you see this a lot more because of the leverage. Note. A strategy I’m currently testing/analyzing is being long or out of the market depending on the 39 week SMA (basically 200 SMA). This limits drawdowns which is the number 1 biggest risk of 3x ETFs.
@@rajaymahmood A simple moving average. Tehnical indicator. And i tested the strategy and also implemented a part where we take a % profit each time the underlying is overbought in RSI on a weekly time chart. This strategy outperforms the market. And I will allocate a lot more capital to it when the next drop comes. Currently im up good last year with my small UPRO holdings, a 3x S&P 500.
Lekker accentje Stijn, ik heb ook een paar leveraged ETF's in een apart account waar ik nooit op kijk (zodat ik niet met de schommelingen word geconfronteerd). Hoop dat we rijk zijn over 10 jaar ;)
Thanks Bart! Als NL'er kom je er waarschijnlijk nooit vanaf ;P Lekker bezig! Laten we hopen dat de markt naar boven én naar rechts blijft gaan, dan komt het vast goed met onze triple leveraged etfs.
DCA is the secret sauce that a lot of folks to my surprise that I have found out do not know about. Everybody thinks that they can only invest 1 time into index funds and they think this for years without ever being educated properly on how to invest. I have family members and friends that think that. They literally don’t know that brokerages have recurring investment features so they either don’t invest at all or they invest the bare minimum because they see that many index funds have too high investment requirements for them to get in like how the $3,000 vanguard minimum invest requirements are with their mutual admiral shares index funds like VTSAX or VTWAX. I swear on everything many folks unfortunately are thinking this.
In your backtests did you include the affect of interest rates. For example when the internal drag of the leveraged ETF to obtain swaps when the fed funds rate is at 10% vs when it is at 1% can make quite a bit of difference.
The massive attraction of leveraged ETFs is the easy access to leverage. The question is do the returns outweigh the losses from the relatively high fees and compounding/rebalancing? I have just under 4% of my portfolio in 3VT, a leveraged ETF tracking the Vanguard Total World ETF. If VT has a good year this year, my gains will be huge, even with the high fees. Caution in investing is good and responsible, but I wonder if there's a cautionary bias towards leveraged ETFs?
Great video! We are like-minded investors, I have very similar thoughts about leveraged ETFs. I have 2 ideas to share. Why S&P and not the Nasdaq? If you run the numbers, the Nasdaq outperformed the S&P and I think since everything evolves around tech, I will continue to outperform it in the future. I agree with DCA on long-term hold, but I also think you can trade a leveraged ETF. Just get in once a crash/significant correction happens to the index with would drop the ETF value by 30-50% and sell it once climbed back.
Thanks Balint Turi! Great questions and suggestions! I have personally chosen for S&P since the outperformance of the nasdaq composite in general worries me... I am worried for the long-term sustainability of that index. You can of course apply this strategy to the nasdaq; it has historically has had even less large drawdowns! Although, of course the nasdaq data is from a shorter time period. And as an added note, the S&P 500 still has heavy exposure to tech, while being more diversified. I think generally it is a better option for most people (myself included, since I'm quite tech-heavy anyways) You can FOR SURE trade a leveraged ETF. IF a market crash happens, I will buy the shit out of that dip hahaha. I'm thinking of buying a cheap triple leveraged ETF and then waiting for it to recover + write call options for even more returns. I think the insane performances of the DCA tells us that buying the (very obvious) dip is extremely lucrative. All-round, thanks for your suggestions. We indeed think very alike!
@@StijnSchmitz I wish I have possessed this knowledge when I was shopping around in April 2020 to buy the dip! :) I am actively writing call options on some of my stocks, it is a great income. Do you have any cheap leveraged ETF examples that you can share? I am currently focusing on TQQQ, but with its ~$160 price, it is too expensive for me to buy 100 of them! Thanks
@@bbalintka Same! so TQQQ dropped from 60$ to 20$ in march 2020. IF the market crashes big time, I'm personally planning on buying the SPXL, but I am from Europe so there's that! It's also around 150$, but if it drops to 100$ or 50$ I will make sure I buy 100 :) In a long term crash, triple leveraged rtfs can drop WAY MORE. so you also gotta make sure that you can buy that dip too, if it happens to be.
Great video. You have earned a new subscriber. Do you think now is a good time to buy in WisdomTree S&P 500 3x Daily Leveraged (it is down about 23% in the last 6 months)? Or do you expect further decline of the market this year?
Awesome, appreciate it! I am currently DCA'ing into triple leveraged ETFs. I believe a lot of the risks (timing risks, market risks, etc) can be mitigated by DCA'ing, hence that is my strategy regarding these instruments. I am however buying slightly more than I normally would, thanks to that 23% decline. Once the S&P 500 is in a full bear market, I will throw everything I have at it, over time.
Can someone explain this to me, because I just do not understand what's happening. TQQQ goes up and down by 3X in the long term. Why are people saying that it's not? Are you just saying that it's not guaranteed?
But what about taking the period from 1920 or earlier? The situation can change due to the great depression and instead of having 10 mln dollar perhaps we would have got even less rather than we could just investing money in SP500 (funds, tracking this index)
What about double instead of triple leveaged s&p 500? wouldn't that be a very good balance between risk and reward? volatility drag is mitigated, the 33.33% crash risk is now 50% crash risk and you can still outperform the s&p greatly. What do you think about allocating 100$ out of a 1000$ monthly investment to double leveraged s&p500?
I don't think you have spent much time on how this products deteriorate in a sideways market both long and short and when a correction happens it's not a simple HODL and watch it come back out of the dust.
so many win biased youtubers coming out from 2020. very dangerous advice. the next 10 years may not reflect the past 10 years. another thing youtubers need to post sensational data to attract viewers to earn money.
Backtesting back to 1850, spanning the great depression, great recession, and covid crash, 3x leveraged S&P500 vs S&P500 massively favors 3x leverage. Pump money into it religiously. Put money in on a consistent basis even when it's down or up and it should workout.
@@tmsupreme7763 Exactly. Put a 10 week EMA and a 15 week EMA on the chart. Consider only selling 50% when this happends, and keep the rest until a longer EMA cross happends. Take a % profit when RSI is 75 or higher. When the short EMA crosses below the long sell. And vice verca. You would have made big gains with this strategy. You proberly have 30% yearly returns here. Assuming the underlying index also rises maybe 10%
My opinion is: you need to start small (at most 10% of your portfolio). Then let it run. However, never let it become more than 60% of your portfolio. Rebalance and put the money into something else that is not leveraged.
also you can dollar-cost average into the leveraged ETF. This balances out the volatility risk.
it makes sense to start high and slowly reduce the leveraged percentage as you get older and closer to retirement
Thoughts on putting the other portion on a leveraged spot gold etf to hedge against recession/stagflation?
As an lnvesting enthusiast, I often wonder how top level investors are able to become millionaires off investing. . I’ve been sitting on over $545K equity from a home sale and I’m not sure where to go from here, is it a good time to buy into stocks or do I wait for another opportunity?.
Well as you know bigger risk, bigger results, but such impeccable high-value trades are often carried out by pros.
People dismiss the importance of advisors until they are burned by their own emotions. I remember a couple of summers ago, following my lengthy divorce, I needed a good boost to assist my business stay alive, so I looked for qualified consultants and came across someone with the highest qualifications. She has helped me raise my reserve from $275k to $850k, despite inflation.
How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?
NICOLE ANASTASIA PLUMLEE is her name. She is regarded as a genius in her area and works for Empower Financial Services. She’s quite known in her field, look-her up.
Thank you for this amazing tip. I just looked the name up and wrote her.
I do daily dollar cost averaging into leveraged ETFs to mitigate the risk of volatility drag. If it drops there's drag, but you also buy more at low prices. And if it really drops hard, you can put in a lump sum that will grow on the way back up. I do this for a 2x leveraged Nasdaq fund which I hold long term, and also for a 4.3x fund which I daily DCA into then take profits from whenever it is having a really good run. Long term the drag on the 4.3x is too dangerous to hold.
Where on earth did you find a 4,3% fund… that’s crazy just do 3x its the optimal leverage. It has been analysed in debt.
Thoughts on BITX
You'll notice that vol- drag works in your favour over the long term. Thats why 3x etfs actually return much more than 3x the underlying. In a downturn they actually lose less than 3x also... There are slightly more up days than down days, and as long as this generally remains true im a long term holder who's buying in on dips > 10%. One problem I have is sleeping- I'm in Australia and tqqq trades when I should sleep. Soon ill have to rebalance as its now about 30% of my portfolio, which maybe too High at 51yo. If I was a younger goat, id exclusively give these etfs time and feed them regularly.
The EU version QQQ3 trades couple of hours earlier, it might be an option for you.
Thanks Nik, but I don't actively trade it. I just keep checking up on it obsessively!😀@@nikolagenov8881
In back tests moving to cash when the s&p500 is
These are my favorites. I own TNA, SOXL, TECL, & TQQQ. At least 100 shares for each of them! I do sell covered calls and puts on them from time to time. Holding is definitely the way to go!
That is awesome! You must be generating A LOT of passive income then, huh?
@@StijnSchmitz Yeah. Actually have made several thousands since I started doing it. Of course a lot of people would say it’s risky and also mention that the market crash would be bad but I think it’s going to be fine for at least a few more months or years perhaps ! Everything is a risk anyways. I like them better than single stocks.
@@RicardoHernandez-zr1pw That is great. I would like to know if you considered buying LEAPS on them? What do you think about that?
@@RicardoHernandez-zr1pwhow has it worked out for you these last couple of years? I'm thinking of getting into UPRO?
This guy's hair is leveraged also. :)
lmao
Epic
Good video. Btw you don’t have to worry about the S&P500 dropping 34% in a day anymore. Look up market-wide circuit breakers.
Since February 2013, there have been market-wide circuit breakers that respond to single-day declines in the S&P 500 index. When the index falls by 7% below its previous close, it is considered a Level 1 decline. A Level 2 decline refers to a drop of 13%. Finally, a Level 3 decline refers to a drop of 20%.
Level 1 or 2 circuit breakers halt trading on all
exchanges for 15 minutes unless they are triggered at or after 3:25 PM (in which case trading is allowed to continue). Level 3 circuit breakers halt trading for the remainder of the trading day (from 9:30 a.m to 4:00 p.m.).
Great addition! you are completely right :)
@@QuynhHLwhat would you do then? When it is level 1 decline you sell and then buy when it is even lower?
Do circuit breakers prevent dying of the fund?
I need to say that tqqq pays dividends, quite similar to SPy, for example. And because tqqq grows so fast, the dividends grow too, despite the low yield.
sP 500 cannot go down 30%in a day- stops at 20
how do you mean
Volatility drag is present in any ETF also the ones without leverage. But in a leveraged ETF you see this a lot more because of the leverage.
Note. A strategy I’m currently testing/analyzing is being long or out of the market depending on the 39 week SMA (basically 200 SMA). This limits drawdowns which is the number 1 biggest risk of 3x ETFs.
What is this strategy? What is SMA?
@@rajaymahmood A simple moving average. Tehnical indicator.
And i tested the strategy and also implemented a part where we take a % profit each time the underlying is overbought in RSI on a weekly time chart.
This strategy outperforms the market. And I will allocate a lot more capital to it when the next drop comes.
Currently im up good last year with my small UPRO holdings, a 3x S&P 500.
The stock market can't go down 33%, wall street installed circuit breakers to stop trading after 20% down day for S&P500
Lekker accentje Stijn, ik heb ook een paar leveraged ETF's in een apart account waar ik nooit op kijk (zodat ik niet met de schommelingen word geconfronteerd). Hoop dat we rijk zijn over 10 jaar ;)
Thanks Bart! Als NL'er kom je er waarschijnlijk nooit vanaf ;P
Lekker bezig! Laten we hopen dat de markt naar boven én naar rechts blijft gaan, dan komt het vast goed met onze triple leveraged etfs.
so It is 2 years later! How are you doing with this type of investing? 🤔
Great video! Dollar Cost Averaging into leveraged ETFs is such a great tool.
DCA is the secret sauce that a lot of folks to my surprise that I have found out do not know about. Everybody thinks that they can only invest 1 time into index funds and they think this for years without ever being educated properly on how to invest. I have family members and friends that think that. They literally don’t know that brokerages have recurring investment features so they either don’t invest at all or they invest the bare minimum because they see that many index funds have too high investment requirements for them to get in like how the $3,000 vanguard minimum invest requirements are with their mutual admiral shares index funds like VTSAX or VTWAX. I swear on everything many folks unfortunately are thinking this.
In your backtests did you include the affect of interest rates. For example when the internal drag of the leveraged ETF to obtain swaps when the fed funds rate is at 10% vs when it is at 1% can make quite a bit of difference.
Great video! Thanks for the info
Awesome, thanks Jay!
The massive attraction of leveraged ETFs is the easy access to leverage. The question is do the returns outweigh the losses from the relatively high fees and compounding/rebalancing? I have just under 4% of my portfolio in 3VT, a leveraged ETF tracking the Vanguard Total World ETF. If VT has a good year this year, my gains will be huge, even with the high fees. Caution in investing is good and responsible, but I wonder if there's a cautionary bias towards leveraged ETFs?
The risk of leveraged etfs is big short term losses. Never let all you money in these investments. But they are the best way to get rich quick.
Do you know of any particular leveraged ETF for S&P with low costs?
Great video! We are like-minded investors, I have very similar thoughts about leveraged ETFs. I have 2 ideas to share. Why S&P and not the Nasdaq? If you run the numbers, the Nasdaq outperformed the S&P and I think since everything evolves around tech, I will continue to outperform it in the future. I agree with DCA on long-term hold, but I also think you can trade a leveraged ETF. Just get in once a crash/significant correction happens to the index with would drop the ETF value by 30-50% and sell it once climbed back.
Thanks Balint Turi! Great questions and suggestions! I have personally chosen for S&P since the outperformance of the nasdaq composite in general worries me... I am worried for the long-term sustainability of that index. You can of course apply this strategy to the nasdaq; it has historically has had even less large drawdowns! Although, of course the nasdaq data is from a shorter time period. And as an added note, the S&P 500 still has heavy exposure to tech, while being more diversified. I think generally it is a better option for most people (myself included, since I'm quite tech-heavy anyways)
You can FOR SURE trade a leveraged ETF. IF a market crash happens, I will buy the shit out of that dip hahaha. I'm thinking of buying a cheap triple leveraged ETF and then waiting for it to recover + write call options for even more returns. I think the insane performances of the DCA tells us that buying the (very obvious) dip is extremely lucrative.
All-round, thanks for your suggestions. We indeed think very alike!
@@StijnSchmitz I wish I have possessed this knowledge when I was shopping around in April 2020 to buy the dip! :) I am actively writing call options on some of my stocks, it is a great income. Do you have any cheap leveraged ETF examples that you can share? I am currently focusing on TQQQ, but with its ~$160 price, it is too expensive for me to buy 100 of them! Thanks
@@bbalintka Same! so TQQQ dropped from 60$ to 20$ in march 2020. IF the market crashes big time, I'm personally planning on buying the SPXL, but I am from Europe so there's that! It's also around 150$, but if it drops to 100$ or 50$ I will make sure I buy 100 :)
In a long term crash, triple leveraged rtfs can drop WAY MORE. so you also gotta make sure that you can buy that dip too, if it happens to be.
Which platform you use? I'm in London, is there platform for traditional options trading?
excellent video stign
Thanks Matlub!
Thank you for your efforts 🙏
Thanks!
Great video! Now you made me interested in the mechanics behind a leverage. Maybe you could dive into this and save me a lots of headaches and time ??
Great suggestion, thanks!
How can you track your investment in real time?
Great Vid!
Thanks Fred!
Great video. You have earned a new subscriber. Do you think now is a good time to buy in WisdomTree S&P 500 3x Daily Leveraged (it is down about 23% in the last 6 months)? Or do you expect further decline of the market this year?
Awesome, appreciate it! I am currently DCA'ing into triple leveraged ETFs. I believe a lot of the risks (timing risks, market risks, etc) can be mitigated by DCA'ing, hence that is my strategy regarding these instruments. I am however buying slightly more than I normally would, thanks to that 23% decline. Once the S&P 500 is in a full bear market, I will throw everything I have at it, over time.
Well, get 2X instead 3x and risk is non existent, right?
No, the risk is then multiplied by 2 , then divided by 2 because it's 2X
@bradcruise6291 2 divided by 2 is 1, so there is no risk.
Do you think right now is good time to start investing in a etf like TQQQ? Or I should wait until it goes down again like last year?
Can someone explain this to me, because I just do not understand what's happening.
TQQQ goes up and down by 3X in the long term. Why are people saying that it's not? Are you just saying that it's not guaranteed?
@StijnSchmitz are you able to give us the reversed engineered TQQQ figures in an excel for us to download
But what about taking the period from 1920 or earlier?
The situation can change due to the great depression and instead of having 10 mln dollar perhaps we would have got even less rather than we could just investing money in SP500 (funds, tracking this index)
Which brokerage do u use ?? I am outside usa??
I personally use ETORO! Keep in mind, this is not a recommendation nor am I affiliated with the company.
What about double instead of triple leveaged s&p 500? wouldn't that be a very good balance between risk and reward? volatility drag is mitigated, the 33.33% crash risk is now 50% crash risk and you can still outperform the s&p greatly. What do you think about allocating 100$ out of a 1000$ monthly investment to double leveraged s&p500?
Thanks dude
10 million in a lifetime, how lucky would you have to be, and the price of s&p in the 40s would be practically for nothing 😅
I don't think you have spent much time on how this products deteriorate in a sideways market both long and short and when a correction happens it's not a simple HODL and watch it come back out of the dust.
Please can you share more ? What do you mean? What is your strategy?
What language are u speaking. Was looking forward to listening to this video but was disappointed tht it wasnt in english😢
It's supposed to be English, sorry if it's an hard accent to listen to!
@@StijnSchmitz lol alls good! I just had to listen at 1x speed instead of my usual 2x 😂
@@garettb1625 Hahhahah, sorry for taking up 50% more of your time ;p
@@garettb1625 2x leverage video speed
so many win biased youtubers coming out from 2020. very dangerous advice. the next 10 years may not reflect the past 10 years. another thing youtubers need to post sensational data to attract viewers to earn money.
Backtesting back to 1850, spanning the great depression, great recession, and covid crash, 3x leveraged S&P500 vs S&P500 massively favors 3x leverage. Pump money into it religiously. Put money in on a consistent basis even when it's down or up and it should workout.
Rip everyone who followed this advice
Nope
I don't know I am looking at a triplex leverage fund right now and it went up +145 % last year..
@@tmsupreme7763 Exactly. Put a 10 week EMA and a 15 week EMA on the chart.
Consider only selling 50% when this happends, and keep the rest until a longer EMA cross happends.
Take a % profit when RSI is 75 or higher.
When the short EMA crosses below the long sell. And vice verca. You would have made big gains with this strategy.
You proberly have 30% yearly returns here. Assuming the underlying index also rises maybe 10%
@@tmsupreme7763that’s insane.
you will remain poor and not so smart
Martin Thomas Wilson Mark Hernandez Scott
You're dropping syllables when you speak. This makes it very difficult to understand you.
Thanks for the criticism! Do you have some examples so I can try to improve? :)
Thats bull shit, longer you hold these ETFs decay will eat your money over time.